Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Gold Rises to One-Week High as Ukraine Spurs Haven Demand

May 14 (Bloomberg) -- Gold futures rose to a one-week high as mounting political unrest in Ukraine boosted demand for the metal as a haven asset.

Ukraine “is as close to civil war as you can get” and a solution must be found that satisfies all regions, Russian Foreign Minister Sergei Lavrov said today. Bullion has climbed 8.6 percent this year after Russia annexed the Crimean peninsula in March, followed by clashes between pro-separatists and government forces in nearby eastern regions of Ukraine.

The conflict has revived demand for the metal after prices tumbled 28 percent in 2013, the biggest annual decline since 1981, as equities rallied and the U.S. economy accelerated. “While we remain bearish on gold, escalating geopolitical tensions in Ukraine have offset stronger” signs of growth this year, Goldman Sachs Group Inc. said in a report dated yesterday.

“Things between Ukraine and Russia are simmering, and that leaves gold poised to go higher,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview. “People want to hold gold like an insurance policy, because it’s still unclear which way things are going to there.”

Gold futures for June delivery climbed 0.9 percent to settle at $1,305.90 an ounce at 1:58 p.m. on the Comex in New York, the biggest gain for a most-active contract since May 2. Prices earlier touched $1,309.20, the highest since May 7.

Bullion also advanced today after a government report showed U.S. wholesale prices in April rose by the most in more than a year, fueling concerns that consumer costs will begin to rise at a faster pace.

“The inflation data was hotter than expected, and that brings people back to gold,” Lesh said. “The bias in the market right now is to the upside.”

Fed Stimulus

In the past 12 months, gold has fallen 8.3 percent as the Federal Reserve curbed stimulus. Fed Chair Janet Yellen said this month the U.S. central bank’s four cuts in monthly bond purchases since November were “appropriate” because there is “sufficient underlying strength” in the domestic economy.

“We continue to expect a sequential acceleration in U.S. economic activity, and hence for gold prices to decline,” Goldman analysts led by New York-based Jeffrey Currie said in the report. At the same time, “the uncertain outlook in Ukraine may continue to delay this move lower.”

The bank reiterated it expects prices to drop to $1,050 in 12 months.

Silver futures for July delivery rose 1.2 percent to $19.775 an ounce on the Comex.

To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net

To contact the editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net Joe Richter

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.